Singapore’s workforce hosts one of the highest proportions of foreign workers in the world, with about one-third of all workers being born in another country. The highly globalized city-state just announced a new points-based visa system that will apply to some of its highest-paid foreign workers in the Employment Pass (EP) program, effective September 2023 for new visa applications and September 2024 for existing visa application renewals.
The new program is among the most disruptive visa policy changes ever in Singapore, whose economy relies heavily on overseas labor across all sectors. The incoming system, known as the Complementarity Assessment Framework (COMPASS), mirrors movements other developed economies – such as Australia, Canada, New Zealand and the United Kingdom – have made toward adopting a points-based framework for immigration.
It is necessary for companies to plan ahead and understand how the provisions and implications of COMPASS may impact their talent strategy.
Why is COMPASS being implemented?
Singapore, as one of Asia’s most vibrant hubs for global trade and investment, has sought to reverse a drop in its expat population during the COVID-19 pandemic and continues to signal openness to global trade, investment and talent. The recently announced Singapore Economy 2030 vision sets goals for 2030, such as reaching an export value of at least S$1 trillion and doubling offshore trade value to US$2 trillion.
Namely, the overhaul to Singapore’s visa framework underscores how the government of Prime Minister Lee Hsien Loong is seeking to bolster local employment and industries while addressing public concerns that international firms in Singapore favor hiring foreigners. Notably, the announcement of COMPASS comes on the heels of recent minimum salary increases for foreign workers and tightened quotas for some middle-tier positions implemented by Singapore’s Ministry of Manpower (MOM).
COMPASS is intended to recognize applicants offering in-demand skills and supporting strategic economic priorities, thus creating rewarding jobs for Singaporeans, according to MOM.
“We remain committed to our goals of upgrading our workforce, comprising a strong Singaporean core, and a high-quality and diverse foreign workforce,” said Manpower Minister Dr. Tan See Len. He also added that the new guidelines aim “to ensure diversity in our foreign workforce – because a truly open and connected labor market must also be able to draw the best from all around the world.”
How does COMPASS work?
The points system will apply to applicants for Singapore’s EP program, which typically engages highly skilled and top salaried workers. EP holders comprise about 14% of the country’s nearly 1.2 million foreign workers, according to the most recent government data. They typically fall into the classification category of professionals, managers, executives and technicians (PMETs). According to guidance from Singapore’s MOM, most current visa holders will pass the new criteria.
Individual and firm-related attributes are factored into the COMPASS assessment calculation. In addition to factoring in the candidate’s salary, education and skills, the new framework also accounts for whether the nationality of the candidate improves the diversity of the hiring firm and if the firm supports local employment.
COMPASS operates based on the following criteria and attributes:
Under the COMPASS framework, EP applicants will need to earn at least 40 points. In addition to receiving points for adding nationality diversity to the hiring firm, applicants could earn 20 points for having a degree from a top-tier institution or a fixed monthly salary greater than 90% of local peers in their job sector. The new framework also rewards bonus points to applicants with certain skill sets or if they work for a firm partnering with the government in innovation or internationalization activities.
All applicants must first meet the EP qualifying salary minimum, which corresponds with their age. COMPASS further takes sectoral variations into account to determine salary norms. An application earns points by meeting sector-specific benchmarks for local PMET salaries, which are also adjusted for age.
Applicants also gain points based on their educational qualifications. It is the employer’s responsibility to ensure the validity of a candidate’s qualifications.
Top-tier institutions include the world’s top 100 universities based on international rankings, Singapore’s autonomous universities and vocational institutions highly recognized in a particular field. In general, degree-equivalent qualifications refer to foreign qualifications assessed to be comparable to a bachelor’s degree as well as professional qualifications well-recognized by the candidate’s industry and endorsed by a relevant agency in the sector.
Candidates without degree-equivalent qualifications can still pass COMPASS by earning sufficient points on other criteria.
COMPASS offers more points to applicants whose nationality represents a small proportion of the employing firm’s PMET employees. The applicant’s nationality is determined based on the nationality of their passport in MOM’s records.
If a firm is applying to bring in a candidate whose nationality already forms a significant share of its PMET employees, they will not earn points.
MOM regards all employees in the firm earning at least S$3,000 per month as part of the PMET count. By default, an applicant scores 10 points if the firm employs fewer than 25 PMET employees.
Firm’s support for local employment
An applicant earns more points if the employing firm has a relatively higher proportion of locals among its PMET workforce, compared to peers in the same subsector as determined by MOM.
Just like in the diversity criterion, MOM regards all employees earning at least S$3,000 per month as PMETs. By default, an applicant will score 10 points if the firm employs fewer than 25 PMET employees.
If the employing firm’s local PMET share is at least 70% (a figure pegged to the 20th percentile of all firms economy-wide), an applicant will earn at least 10 points. This is rewarded regardless of where the firm ranks within its subsector.
Singapore’s Shortage Occupation List (SOL) allows priority to be given to EP holders in occupations requiring highly specialized skills currently in shortage in the local workforce. The list is formed by a robust tripartite evaluation process, taking into account industry demands and local workforce economic development goals.
The bonus points a candidate receives will be reduced from +20 to +10 if their nationality forms a one-third or higher share of the firm’s PMET workforce. This provision exists to encourage resilience and diversity in firms, especially in priority areas requiring in-demand skills.
Strategic economic priorities bonus
To qualify for the strategic economic priorities bonus, firms must be active in selected programs run by Singapore’s various economic agencies aimed at innovation or internationalization activities. Furthermore, they must show a commitment to developing the local workforce or ecosystem.
How does COMPASS assessment work?
In order to pass COMPASS assessment, an application must receive a score of at least 40 points. If an application meets expectations (earning 10 points) in all four foundational criteria, it will pass. Otherwise, applications can make up the required points by exceeding expectations in another criterion or by earning bonus points.
Who is exempt from COMPASS?
Candidates are exempt from COMPASS if they fulfill any of the following conditions with their application:
- Earning at least S$20,000 fixed monthly salary, which is similar to the prevailing Fair Consideration Framework (FCF) job advertising exemption.
- Applying as an overseas intracorporate transferee as part of the World Trade Organization’s General Agreement on Trade in Services or an applicable Free Trade Agreement that Singapore is involved in.
- Filling a role on a one-month basis or less
Once COMPASS is fully in force, Singapore’s FCF Watchlist will be redesigned to focus on supporting businesses scoring poorly on the firm-related attributes.
“We will walk with these firms, we will help them strengthen their workforce profile, and adjust to the new framework,” said Dr. Tan in his Committee of Supply speech to introduce the framework. “When COMPASS is in place, employers can use the Pre-Assessment Tool to obtain a ‘balanced scorecard’ of how each application fares prior to submission, so that they know what areas they must improve in.”
As MOM has pointed out, the majority of current visa holders in the EP program would pass COMPASS assessment. However, some firms that employ foreign workers will need to make adjustments in order to retain their workforce. It may make sense for some multinational companies (MNCs) to look at hiring through a local Employer of Record (EOR) like GoGlobal, which handles all visa requirements.
For more information on GoGlobal’s EOR services in Singapore, talk with one of our experts.